Margaret Carol Burns - Page 8

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          property, after the death of the payee spouse.  Sec. 71(b)(1)(A)-           
          (D).  The test under section 71(b)(1) is conjunctive; a payment             
          is includible in income as alimony only if all four requirements            
          of section 71(b)(1) are met.  See Johnson v. Commissioner, T.C.             
          Memo. 2006-116; Jaffe v. Commissioner, T.C. Memo. 1999-196.  The            
          characterization of the payments as "alimony" in the divorce or             
          separation instrument does not affect their treatment for Federal           
          income tax purposes; the test is whether the foregoing                      
          requirements are satisfied.  Hoover v. Commissioner, 102 F.3d               
          842, 844 (6th Cir. 1996), affg. T.C. Memo. 1995-183.                        
               It is undisputed that the MSA satisfies the definition of a            
          divorce or separation instrument.  See sec. 71(b)(2).  The $1,400           
          monthly payments at issue herein were made in cash, the agreement           
          pursuant to which the payments were made did not expressly                  
          designate that they were excludible from petitioner's income and            
          nondeductible by Mr. Burns,3 and petitioner and Mr. Burns were              
          living separate and apart.  Thus, the payments received by                  

               3 The qualified divorce instrument must contain a clear                
          direction with regard to tax effect to negate alimony treatment             
          if the payment would otherwise satisfy the requirements of sec.             
          71.  See Richardson v. Commissioner, 125 F.3d 551 (7th Cir.                 
          1997), affg. T.C. Memo. 1995-554; see also Estate of Goldman v.             
          Commissioner, 112 T.C. 317 (1999) (finding clear and express                
          direction from language of the agreement specifying that all                
          property transfers in the settlement agreement, including a                 
          series of cash payments that would otherwise satisfy sec.                   
          71(b)(1)'s requirements, were to be treated as "nontaxable"                 
          events under sec. 1041), affd. without published opinion sub nom.           
          Schutter v. Commissioner, 242 F.3d 390 (10th Cir. 2000).                    

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